The Drilldown: Two major producers challenge Enbridge’s requests to extend mainline contracts

Canadian Natural Resources Ltd. and Suncor Energy Inc. filed letters with the Canadian Energy Regulator (CER) earlier this week imploring the organization to postpone the approval of an application request put in by Enbridge Inc. as a response to the COVID-19 pandemic.

Enbridge has been pushing for the CER’s approval to expand mainline contracts into long-term contracts for months, as opposed to the spot market that it usually functions as for Canadian oil.

“Enbridge’s insistence on continuing the hearing process under current conditions demonstrates a disregard for the plight of its customers which would not be possible in a more competitive industry and is further evidence of the monopoly power Enbridge exerts,” reads the letter written by Canadian Natural Resource’s lawyer, reports the Financial Post.

Similarly, Suncor has said that collecting the data necessary to determine whether Enbridge’s applications are fair play is more difficult due to the pandemic and the company’s lawyers stated that this “represent[s] an exercise by Enbridge of its market power, with respect to the provision of oil transportation services.”

Enbridge is expected to respond to producers’ concerns on the matter by May 1, according to an emailed response from Enbridge spokesperson Jesse Semko.

Internationally

Earlier this week, U.S. oil prices plummeted into the negatives as oil producers struggle with a drop in global demand for refined products. As storage space for crude continues to shrink, producers have actually been forced to pay buyers to take the commodity away.

As a response, President Donald Trump announced that he has directed his treasury and energy secretaries to develop a financial aid plan to help resurrect the oil market and secure jobs in this sector, tweeting “we will never let the great US oil and gas industry down,” reports The Guardian.

In other news, Kuwait announced yesterday that it will start slashing its global oil production right away, as opposed to waiting for the agreed OPEC+ pledge to cut output begins, according to Reuters.

Alberta-based oil producer DeltaStream Energy Corp. is expected to gross up to CAN$40 million in revenue in 2020 due to earnings it made earlier in the year when crude was still trading at around US$50 per barrel. According to the company’s CEO Roger Tang, DeltaStream has been reducing operations where it can and is now producing less than one tenth of what it normally would. Currently, the company is only turning out about 1,000 barrels a day, this production coming from their oilwells located in the Clearwater Formation.